UK 'working at pace' to minimise damage from Silicon Valley Bank collapse, says chancellor

8 months ago 5

Urgent plans are being drawn up to "avoid or minimise damage" from the disruption threatened by the collapse of the UK arm of Silicon Valley Bank, Chancellor Jeremy Hunt has told Sky News.

The cabinet minister said the government was treating the issue as a "high priority".

He is due to hold talks with Prime Minister Rishi Sunak and the governor of the Bank of England Andrew Bailey this weekend.

The central bank announced on Friday that Silicon Valley Bank UK was set to enter insolvency, following action taken by its parent company in the US.

It was first reported by Sky News City editor Mark Kleinman

While Silicon Valley Bank (SVB) has a limited presence in the UK and does not perform functions critical to the financial system, it has been warned its collapse could have a significant impact on tech start-ups.

Speaking to the Sophy Ridge On Sunday programme, Mr Hunt said: "The Bank of England has made it very clear there is no systemic risk to our financial system, so people should be reassured on that basis.

"But there is a serious risk to our technology and life sciences sectors.

"It happens to look after the money of some of our most promising and exciting businesses.

"And so I want to reassure people, I've been in discussions over the weekend until late last night with the prime Minister, the governor of the Bank of England, many other people.

"And we are working at pace on a solution we will bring forward very soon plans to make sure people are able to meet their cashflow requirements, pay their staff.

"But obviously what we want to do is to find a longer term solution that minimises or even avoids completely losses to some of our most promising companies."

He added: "We will come forward with a solution that helps those very, very important companies with things like payroll and their cashflow requirements.

"But we also want to put in place a longer term solution so that their futures are secure.

"We've been working at pace over the weekend, the night, and the Prime Minister and I and the governor of the Bank of England absolutely determined to do everything we can to protect the future, these very, very important companies."

Dom Hallas of the Coalition for a Digital Economy (Coadec) said: "It is clear this could have a significant impact on the UK's tech start-up ecosystem.

"In light of the concern and panic, I wanted to share an update on what we know and where we are.

"We know that there are a large number of start-ups and investors in the ecosystem who have significant exposure to SVBUK and will be very concerned.

"We have been engaging with the UK Government, including Treasury and No 10, about the potential impact and I know that work has been going on overnight on policy options."

SVBUK said it will be put into insolvency from Sunday evening.

It is a subsidiary of Silicon Valley Bank (SVB) and was the first location it opened outside the US.

The insolvency announcement came after SVB was put under US government control on Friday afternoon in the biggest failure of a US bank since the 2008 financial crisis.

The BoE said the company will stop making payments and accepting deposits.

The move will allow depositors to be paid up to £85,000 from the deposit insurance scheme.

A statement on the SVB website said: "We are announcing that, following conversations with the Prudential Regulatory Authority, there is an intention, barring any intervening event, to put Silicon Valley Bank UK Limited into insolvency from Sunday evening.

"We are determined to work on the behalf of our clients and are proud of our employees in their engagement with you.

"If clients have any questions please get in touch with us and we will try our best to answer any and all of your queries."

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